Dodging Bad CEOs

A curse has befallen Los Angeles. Two of its leading civic institutions -- and for Angelinos of my generation, perhaps its two greatest institutions -- were sold to men so venal, cynical, incompetent, and egomaniacal that they gutted them in just a couple of years. Now, higher authorities have stepped in to stop their further destruction, at least temporarily.

I refer, of course, to the Los Angeles Dodgers and the Los Angeles Times. The Dodgers were already a storied franchise when Walter O'Malley moved them from Brooklyn in 1958. The Times had been the city's dominant paper since the early years of the 20th century, but only in 1960, when Otis Chandler became publisher, did it begin its rise to become one of the nation's greatest newspapers.

Last week, Bud Selig, the commissioner of Major League Baseball, took over control of the Dodgers to keep its owner, Frank McCourt, from using team revenues to pay off his wife, the team's co-owner, in a divorce settlement. Selig's action came as Frank was about to sign a 20-year, $2.5 billion contract with Fox Sports to televise the team's games. The divorce also brought to light that the McCourts, Boston-based parking-lot owners who moved to L.A. when they purchased the Dodgers, had been using team revenues to subsidize their multi-mansioned lifestyle and that Frank McCourt had had to take out a loan to make payroll earlier this month.

Also last week, by sheer coincidence, a number of creditors of the Tribune Company, which owns the Los Angeles Times and has been in bankruptcy court for more than a year, sued the company's onetime shareholders, who in 2007 sold Tribune to Sam Zell, a Chicago-based real-estate magnate. Creditors now claim that Zell's $8 billion buyout was so heavily leveraged that there was no way the company could ever have succeeded. Less than 5 percent of that $8 billion was actually Zell's. Most of the rest came from Tribune employees' stock-ownership plan, which was controlled not by employees but Tribune management. The employees themselves were never asked about the deal, and as the company's fortunes dipped, so did their retirement funds.

If anything, Zell proved himself an even worse steward of the Tribune Company than McCourt with the Dodgers. Zell installed talk-radio executives who knew nothing about newspapers. He derided the editorial staff at the Times and the Trib for not producing the kind of copy that would turn the industry's fortunes around, and made clear that editors and reporters concerned with editorial autonomy and quality journalism were elitists who were no longer to be indulged. He instituted layoff after layoff, so that the Times, which had had an editorial staff of 1,200 in 2000, saw its ranks reduced to roughly 500 today. A little more than a year after his purchase, with the recession clobbering revenues and Zell's executives still clueless about how to run a newspaper, Tribune entered bankruptcy proceedings, where it remains mired to this day.

What did Los Angeles do to deserve Zell and McCourt? Each took control of a business in which neither had any background or training. Those businesses, moreover, were key to the rise of the modern Los Angeles, helping cement its role as the dominant city of the Sunbelt as the nation expanded west and south after the end of World War II. Under O'Malley, the Dodgers became (along with the Yankees) the most successful franchise in professional sports. Their broadcaster, Vin Scully (now in his 62nd year behind the mic), talked to more Angelenos on a daily basis (during baseball season) than anyone had before, with a patter that was at once so unaffected and so literate that he probably raised the city's students' verbal SAT scores for at least several decades.

A similar combination of mass and class also characterized the Times once Otis Chandler took control. The paper, which had previously been the leading promoter of both local real estate and local Republicans (and I mean in its news stories, not just its editorials), dropped its partisanship and parochialism, established bureaus with talented reporters across the country and the world, and hired critics and columnists as good as any in the country.

Los Angeles in the years of O'Malley and Otis the Good was a city moving unevenly into modernity. A thuggish, paramilitary police force, an enclave of small-town racism in a city with, in those days, fast-growing black and Jewish populations, managed to set off a couple of world-class riots. On the other hand, those black and Jewish populations got together to elect liberal African American Tom Bradley mayor in 1973, at a time when no other majority-white city had elected a black mayor, and re-elected him four times thereafter. The Times and the Dodgers, for all their imperfections, were of a piece with the Bradley mayoralty. They were elements of a city that had gained a certain sophistication and tolerance, major players in a civic elite that prided itself on the city's betterment as well as -- and linked to -- its own self-interest.

It was not to last. Most of the major corporations that had been headquartered in Los Angeles -- the banks, the aerospace conglomerates, the movie studios -- sold themselves to larger companies headquartered elsewhere. Walter O'Malley's son Peter sold the Dodgers to Rupert Murdoch's News Corp in 1997. All News Corp was really interested in was the income from broadcasts, and after a half-decade, it unloaded the club on McCourt, who couldn't afford it but who put up his Boston parking lots as collateral. (When he couldn't make the payments, Murdoch took the lots a year later.) With the McCourts running the team, Fox was assured of a revenue stream for its broadcasts, and the McCourts were assured of an income stream to support their personal extravagances, even as the funds available for purchasing players or providing security at the stadium dwindled.

A couple of years after the younger O'Malley sold the Dodgers, Otis Chandler's reactionary cousins got control of the paper and sold it to the Tribune Company, which five years later sold itself to Zell. Much of the city's governing elite, its chamber of commerce, its labor and academic leaders, had implored the Tribune to stop the cutbacks that were diminishing the Times, and when the Tribune itself went on the block, a few of the city's civically conscious gazillionaires stepped up to try to buy the Times and restore it, at least partially, to its past greatness. But the men who ran the Trib preferred Zell, a fellow Chicagoan, though he put up virtually none of his own money and promised to bring no new resources to the company (indeed, he promised to downsize even more).

Perhaps Angelinos have learned their lesson after the businessmen invited in to run their hallowed institutions ruined them. The supermarket magnate Ron Burkle is offering to buy the Dodgers (and he had offered to by the Times before) but a more interesting proposal comes from L.A. City Council Member Janice Hahn (whose father, county-supervisor-for-four-decades Kenneth Hahn, had helped to first bring the Dodgers to L.A.), who has proposed that Selig offer shares in the team to L.A. residents, who could collectively own it like the citizens of Green Bay, Wisconsin, own the Packers.

It's almost inconceivable that Selig, who's nothing if not a conventional businessman, would go for Hahn's proposal. But she's got a strong case, at least in theory. Some private property isn't private. Storied baseball teams, great newspapers, don't belong just to their owners. They require the public's commitment, investment of time and emotional energy, if they are to thrive. They become a civic trust as well as a private enterprise; they would not be successful private enterprises if they weren't also a civic trust.

Civic ownership may be the only way to ensure that trust isn't violated. Zell and McCourt come from a generation of American capitalists whose concern for their employees is all but nonexistent and whose zeal for cutting costs, while raising their own pay, has become so routine it's no longer news. As events have shown, you would not wish such CEOs on the Dodgers or the Times. You would not wish such CEOs on America.

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